On Call runs every two weeks, alternating between answering reader questions and discussing hot topics in the cell phone world.
Sprint's CEO, Dan Hesse, got the rumor mill churning yesterday when he spoke to the Financial Times about another possible merger between his company and T-Mobile. According to the newspaper, Hesse said that there is a "logic" to such an arrangement if the two companies were to adopt LTE as a 4G technology. Hesse did not elaborate any further, but even one well-placed word is enough to get the wireless industry talking.
It's not the idea of a wireless merger that I find unlikely. After all, cell phones carriers in the United States have been getting hitched for several years. Since I've been at CNET, Cingular gobbled up the original AT&T Wireless, Sprint joined with Nextel, and Verizon Wireless acquired Alltel. Given so many marriages, another union is quite possible; however, I consider these two carriers to be more suited for the Odd Couple than Love Story.
Even if it's not the traditional CDMA/GSM divide, technology remains a hurdle. At the moment, Sprint is running first and hard among U.S. carriers in the 4G race. It has the first 4G phone in the United States and it's spending a lot of cash to expand this country's first 4G network. That's great for Sprint, but it's the only U.S. carrier to use WiMax as its 4G technology. Conversely, AT&T, Verizon Wireless, and most carriers aboard have opted to use the competing LTE standard and T-Mobile is expected to choose it as well.
Though the differences between WiMax and LTE aren't as vast of a divide as CDMA and GSM are, the two technologies aren't completely interoperable. If history is any guide, Sprint doesn't have the best record in merging dissimilar networks. Just consider Nextel's iDEN. Even five years after this unlikeliest of mergers, Sprint still appears as if it doesn't quite know what to with iDEN. The carrier has tried a few ideas like the now discontinued QChat service, but those efforts haven't been successful. Also, despite Sprint's original promises to end iDEN service for voice calls by this year, that network is still going strong.
Alternatively, Sprint could adopt the more popular LTE. Hesse has already proposed such a move and he mentioned it again in his conversation with the Financial Times. "We have the spectrum resources where we could add LTE if we choose to do that, on top of the WiMax network," he added. "The beauty of having a lot of spectrum is we have a lot of flexibility." That's plausible, but I have to agree with my colleague Maggie Reardon at CNET News that if it happens at all, it won't be for a few years. As Maggie says, Sprint is heavily invested in WiMax so it seems unlikely that it would make a sudden jump to LTE anytime soon. Also, T-Mobile is still concentrating on expanding its HSPA+ network, which is an upgraded 3G technology. HSPA+ can theoretically compete with WiMax's download speeds, but T-Mobile hasn't outlined its 4G plans.
I'm also skeptical that the companies could merge their respective brands even if Sprint had a stronger brand to leverage. Granted, its focus on 4G, price, customer service, and Android phones is changing that reality, but I still can't capture in a sentence what Sprint is and what it stands for. Also remember that absorbing Nextel's strong network brand didn't go so smoothly for Sprint immediately after the 2005 merger.
T-Mobile, on the other hand, seems to know what it's about. It may the smallest of the four carriers, and it may have been last to the 3G party, but it was early on Android, its plans are affordable and it continually wins awards for customer service. A company's brand is a valuable asset in any merger and I suspect that T-Mobile isn't interested in surrendering its image anytime soon.
Maggie called it correctly when she said T-Mobile may very well partner with Clearwire, but we both think that any kind of merger is not in the cards for the next few years. We could be wrong, so let us know if you disagree.